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CASE NO.: Appeal (civil)  9672 of 2003

PETITIONER: Milkfood Limited

RESPONDENT: M/s GMC Ice Cream (P) Ltd.

DATE OF JUDGMENT: 05/04/2004

BENCH: S.H. KAPADIA

JUDGMENT: J U D G M E N T

WITH

CIVIL APPEAL Nos. 9673-9674 OF 2003

KAPADIA, J.

       The question for consideration in the present appeals is  \027 as to whether the Arbitration Act, 1940 (hereinafter referred  to as "the 1940 Act") would apply in the facts and  circumstances of the case or whether the case will have to be  dealt with under the Arbitration & Conciliation Act, 1996  (hereinafter referred to as "the 1996 Act")?         Briefly, the facts of the case are as follows.  The parties  hereto entered into an agreement on 7.4.1992 in terms whereof  the first respondent herein was to manufacture and pack in its  factory a wide range of ice cream for and on behalf of the  appellant.  The agreement was to remain valid for five years.   Admittedly, the contract contained an arbitration agreement  being clause 20 thereof which is as under:\027         "In the case of any dispute or any difference  arising at any time between the Company and the  Manufacturer as to the construction, meaning or  effect of this Agreement or any clause or thing  contained therein or the rights and liabilities of the  Company or the Manufacturer hereunder in  relation to the premises, shall be referred to a  single arbitrator, in case the parties can agree upon  one, and failing such Agreement, to two arbitrators  one to be appointed by either party and in case of  disagreement between the two arbitrators aforesaid  and in so far as and to the extent that they disagree  to, an umpire to be appointed by the said two  arbitrators before they enter upon the reference.   

All such arbitration proceedings shall be in  accordance with and subject to the provisions of  the Arbitration Act, 1940, or any statutory  modification or reenactment."  

On the strength of this agreement dated 7.4.1992, the  respondent herein filed title suit No.40 of 1995 on 20.5.1995 for

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an injunction restraining the appellant herein from disturbing  manufacture and supply of ice cream.  In the said suit, the  appellant applied for stay of suit vide application dated  17.7.1995 under section 34 of the 1940 Act.  By order dated  3.8.1995, the trial Court stayed the suit.  Being aggrieved, the  respondent herein filed an application before Additional District  Judge, Gaya, which was dismissed on 13.3.1996.  Aggrieved,  the respondent herein carried the matter in revision to the High  Court which was disposed of on 6.5.1997 in terms of the  following order:\027 "Before this court parties have agreed that the  dispute between them may be referred as per the  agreement to arbitrators chosen by the parties.  The  plaintiff has chosen Shri Uday Sinha, a retired  judge of this court and Senior Advocate of the  Supreme Court, while the defence have chosen  Shri Hari Lal Agarwal, Senior Advocate of the  Supreme Court, a former judge of this court and  Chief Justice of Orissa High Court as arbitrators.   The dispute between the parties is referred to  arbitrators.

I hope that the learned Arbitrators will dispose of  the arbitration proceedings within three months of  the entering the reference." The above order is a consent order by which application  for stay of the suit stood disposed of.  Pursuant to the consent  order, the arbitrators nominated by the respective parties in turn  appointed an umpire.  On 19.8.1997, the parties were asked to  appear.  The respondent was called upon to file statement of  claim.  An issue arose for determination at that stage as to  which of the two Acts applied to the arbitration.  On behalf of  the appellant, it was submitted that application under section 34  of the 1940 Act constituted a request to refer the matter to the  arbitration and consequently the request marked the  commencement of the arbitration proceedings.  This argument  was rejected by the arbitrators on the ground that a proceeding  under section 34 of the 1940 Act was essentially a defence to  the suit and it did not amount to referring a claim to arbitration.   It was further held that the arbitration commenced in the present  case when the claim was referred to the arbitrators on 6.5.1997.   In this connection, reliance was placed on the provisions of  section 85(2)(a) of the 1996 Act.  It was further held that the  order dated 6.5.1997 was a consent order and consequently, the  arbitration proceedings commenced only after the said order  which was passed after the new Act came into force.  At this  stage, it may be pointed out that in the course of hearing before  the arbitrators and before the decision could be given on the  above question, the appellant herein filed an application before  the arbitrators dated 7.3.1998 enclosing notice dated 14.9.1995  served by the appellant on the respondent herein whereby the  appellant had appointed Mr. H.L. Aggarwal as their arbitrator  and by which notice the respondent herein was called upon to  appoint their own arbitrator in terms of clause 20 quoted above.   In the application dated 7.3.1998, the appellant submitted that  in view of the above notice dated 14.9.1995, the arbitration  proceedings had commenced under the 1940 Act.  By majority  decision, the arbitrators took the view that the said notice dated  14.9.1995 did not make any difference to the question of  commencement of the arbitral proceedings in view of the  provisions of section 85(2)(a) of the 1996 Act as there was a  clear and explicit agreement between the parties recorded in the  consent order dated 6.5.1997.  It was held that in relation to  arbitration proceedings which commenced before the 1996 Act,  parties were free to agree as to when arbitration proceedings are

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to be regarded as commenced for the purposes of section  85(2)(a) of the 1996 Act and since there was such an agreement  in the consent order dated 6.5.1997, the arbitration proceedings  had commenced under the 1996 Act.  It was further held that by  order dated 6.5.1997 passed by the High Court, the arbitration  was set in motion by the parties when they nominated their  respective arbitrators and the Court ordered that the dispute  between the parties be referred to the arbitrators and that the  arbitration proceedings be disposed of within three months of  entering upon the reference.  It was held that arbitration  commenced when there was a completely constituted  arbitration Tribunal to decide the dispute, which on facts took  place only after the 1996 Act commenced.  It was further held  that the notice dated 14.9.1995 served by the appellant was a  non-starter and that such a notice did not commence arbitral  proceedings in terms of section 85(2) of the 1996 Act.   Consequently, by majority decision, it was held that the consent  order dated 6.5.1997 marked the commencement of the arbitral  proceedings and, therefore, the 1996 Act was applicable.  

One of the learned arbitrators, Mr. H.L. Aggarwal in his  dissenting opinion held that the arbitration proceedings  commenced in the present case when the notice dated 14.9.1995  was issued by the appellant to the respondent.  In this  connection, he placed reliance on section 37(3) of the 1940 Act.   Questioning the majority decision of the arbitrators, the  appellant herein moved an application under section 33 of the  1940 Act in the High Court.  A learned single Judge of the High  Court held that in the present case the disputes were referred to  for arbitration only on 6.5.1997 and, therefore, the parties have  to be governed by the provisions of the 1996 Act.  The Letters  Patent Appeal preferred therefrom was also dismissed by a five- Judge Bench of the High Court as not maintainable.   

Mr. Harish Salve, learned senior counsel appearing on  behalf of the appellant submitted that having regard to the fact  that the notice appointing the arbitrator had been served by the  appellant upon the respondent as far back as 14.9.1995 in terms  whereof the arbitration proceedings commenced, the 1940 Act  was applicable in the instant case.  Referring to section 21 and  section 85 (2) (a) of the 1996 Act, it was urged that there are  well known expressions in arbitral proceedings being  "commencement of the arbitration proceedings", "continuance  of arbitration proceedings", "entering into reference", which in  different context could carry different meanings.  The  Parliament however in the 1996 Act has chosen to use the  expression "commencement of arbitral proceedings", in section  21 the meaning thereof as is understood in common parlance  should be applied.  Strong reliance in this connection was  placed on the decision of Queen’s Bench Division in Charles  M. Willie & Co. (Shipping) Ltd. v. Ocean Laser Shipping Ltd.  [(1999) 1 Lloyds Law Report 225].

Learned counsel for the appellant further submitted that  there was a conflict in the decision of the two-Judge Benches of  this Court as regards the construction of the arbitration  agreement as contained in clause 20 thereof vis-‘-vis the  applicability of the 1996 Act.  In this connection, my attention  was drawn to the decision of this Court in the case N.S. Nayak  & Ors. v. State of Goa [(2003) 6 SCC 56], wherein allegedly a  different note has been struck from an earlier decision of this  Court in Delhi Transport Corporation Ltd. v. Rose Advertising  [(2003) 6 SCC 36].

Per contra, Mr. R.K. Jain, learned senior counsel

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appearing on behalf of the respondent urged that having regard  to the object of 1996 Act, as also in view of the fact that the  arbitrators had already entered into the reference pursuant to the  consent order dated 6.5.1997, this Court may not interfere with  the impugned judgment in exercise of jurisdiction under Article  136 of the Constitution.  Strong reliance was placed on the  judgment of this Court in the case Chandra Singh v. State of  Rajasthan [(2003) 6 SCC 545].

It was next contended that a proceeding commences in  the Court of law when a plaint is filed and by analogy an  arbitration proceeding must be held to be initiated when a claim  petition is filed by the claimant before the arbitrator; that before  a proceeding is said to be initiated before a Court or Tribunal,  the existence of such Tribunal was a condition precedent for  initiation of proceedings.   The learned counsel, therefore,  contended that for purposes of determining the point of time  "when an arbitration proceeding commences", an arbitral  Tribunal must be constituted.  Reliance in this connection was  placed on the judgment of this Court in the case of Secy. to  Government of Orissa v. Sarbeswar Rout reported in [(1989) 4  SCC 578].  It was further submitted that an arbitrator enters into  a reference when he applies his mind to the differences and  disputes between the parties and not prior thereto.   Alternatively, it was submitted that the proceeding commences  when the arbitrator enters upon the reference.  Reliance was  placed on the judgment of this Court in the case Sumitomo  Heavy Industries Ltd. v. ONGC Ltd. reported in [(1998) 1 SCC  305].  It was further submitted that in any event, the starting  point for commencement of the arbitration proceedings would  be when the dispute was referred to by the High Court on  6.5.1997 and not prior thereto.

Learned counsel for the respondent contended that in any  event as the parties had agreed in terms of clause 20 of the  contract that all such arbitration proceedings shall be in  accordance with and subject to the provisions of the 1940 Act  or any statutory modifications or re-enactment thereof, they  must be deemed to have agreed that new Act shall apply.   Strong reliance has been placed on the judgment of this Court  in the case of Thyssen Stahlunion GMBH v. Steel Authority of  India Ltd. reported in [(1999) 9 SCC 334]}, Delhi Transport  Corporation Ltd. (supra) and N.S. Nayak (supra).  Lastly, it  was submitted that section 37 of the 1940 Act, being for the  purposes of commencement of the period of limitation, had no  application whatsoever for the purposes of determining the  question as to whether the 1940 Act will apply or the 1996 Act  will apply.   

I may now notice the provisions of the 1940 Act.  Section  2 defines arbitration agreement to mean a written agreement to  submit present or future dispute to the arbitration, whether an  arbitrator is named therein or not.   Section 2(e) defines  "reference" to mean reference to arbitration. Therefore, the term  "arbitration agreement" is different from the term "reference".   "An agreement to refer" and "a reference" are two separate  transactions while an arbitration agreement is only a contract to  refer, reference is delegation of authority to a named arbitrator.   Section 8 confers power upon the Court to appoint arbitrator  where the parties concurred in the appointment of an arbitrator.   In such a case, after the Court appointed an arbitrator, it is the  parties who referred the dispute to him.  On the other hand,  section 20 enabled a party to apply for filing of the arbitration  agreement in the Court and that section empowered the Court to  make an order of reference to the arbitrator appointed by the

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parties and in the absence of such appointment, the Court was  empowered to make an order of reference to the arbitrator  appointed by it.  In other words, under section 20, unlike  section 8, it is the Court which referred the dispute.  In the case  of Fertilizer Corporation of India Limited v. M/s Domestic  Engineering Installation reported in [AIR 1970 Allahabad 31],  it has been held that under section 20(4), three courses were  open to the Court.  After the arbitration agreement was ordered  to be filed, the Court shall proceed to make reference, firstly to  the arbitrator appointed by the parties in the agreement,  secondly to the arbitrator not named in the agreement but with  regard to whom the parties agreed otherwise, and thirdly when  the parties did not agree upon an arbitrator, to an arbitrator  appointed by itself.  This difference between section 8 and 20  was important as under section 48 of the 1940 Act, it was  provided that the Act shall not apply to any reference pending  at the commencement of the said Act, to which the law in force  immediately prior to the commencement shall continue to apply  notwithstanding any repeal effected by the Act.  Section 48 was  a transitory provision in which the emphasis was on  "reference".  Section 48 of the 1940 Act which corresponded to  section 25 of the English Arbitration Act 1899 was a subject of  debate in larger number of matters as different dates for  different stages of arbitration proceedings were provided for.    Since transitory provision is to be interpreted in the light  of facts and circumstances existing on the date the new Act  coming into force, section 21 and 85(2) of the 1996 Act are  quoted below:\027 "21. Commencement of arbitral proceedings. \027  Unless otherwise agreed by the parties, the arbitral  proceedings in respect of a particular dispute  commence on the date on which a request for that  dispute to be referred to arbitration is received by  the respondent.   85.     Repeal and savings.\027 (1)     \005.   

(2)        Notwithstanding such repeal,\027  

(a)     the provisions of the said enactments shall  apply in relation to arbitral proceedings which  commenced before this Act came into force unless  otherwise agreed by the parties but this Act shall  apply in relation to arbitral proceedings which  commenced on or after this Act comes into force;   

(b)     all rules made and notifications published,  under the said enactments shall, to the extent to  which they are not repugnant to this Act, be  deemed respectively to have been made or issued  under this Act."

       A bare reading of section 21 of the 1996 Act indicates  that arbitral proceedings in respect of a dispute commences on  the date on which request to refer such dispute to arbitration is  received by the respondent, unless otherwise agreed by the  parties.  Section 21 is similar to section 14 of the English  Arbitration Act 1996 which provides that parties are free to  agree as to when an arbitration is to be regarded as commencing  both under the Arbitration Act 1996 and for limitation  purposes.  In the absence of such agreement, section 14 of that  Act applies.  Russell on Arbitration, [XXII Ed. Page 165] says  as follows:-

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"Commencement for limitation purposes.  The  parties are free to agree when an arbitration is to be  regarded as commencing both under the  Arbitration Act 1996 and for limitation purposes.   In the absence of agreement the provisions of  section 14 of the Arbitration Act 1996 apply.   Under that section an arbitration is treated as being  commenced when a notice in writing is served on  the other party requiring him to agree to the  appointment of an arbitrator or, if the parties are  each to make an appointment, requiring him to  appoint an arbitrator.  The party giving the notice  does not have to have already appointed his own  arbitrator.  Where, however, the arbitration  agreement specifies the person to be appointed as  arbitrator, the arbitration is treated as being  commenced when a notice in writing is served on  the other party requiring him to submit the dispute  to that person.  Finally, if the arbitrator is to be  appointed by someone other than a party to the  arbitration proceedings, such as an arbitral  institution, the arbitration is treated as being  commenced when notice in writing is given to that  other person requesting him to make the  appointment.  It is prudent to send to the  respondent a copy of the notice addressed to the  person requested to make the appointment as this  may avoid arguments about when the notice was  given."   

       In the present matter, one is concerned with transitional  provision, i.e. section 85(2)(a) which enacts as to how the  statute will operate on the facts and circumstances existing on  the date it comes into force and, therefore, the construction of  such a provision must depend upon its own terms and not on  the basis of section 21 (see Principles of Statutory  Interpretation by G.P. Singh 8th Ed. Page 188).  In Thyssen’s  case (supra), section 48 of the old Act and section 85(2)(a) of  the 1996 Act came for consideration.  It has been held by this  Court that there is a material difference between section 48 of  the 1940 Act, which emphasized the concept of "reference" vis- ‘-vis section 85(2)(a) of the 1996 Act which emphasizes the  concept of "commencement"; that there is a material difference  in the scheme of two Acts; that the expression "in relation to"  appearing in section 85(2)(a) refers to different stages of  arbitration proceedings under the old Act; and lastly that section  85(2)(a) provides for limited repeal of the 1940 Act, therefore, I  am of the view that one cannot confine the concept of  ’commencement’ under section 85(2)(a) only to section 21 of  the 1996 Act which inter alia provides for commencement of  arbitral proceedings from the date on which a request to refer a  particular dispute is received by the respondent.  In this  connection, I may usefully quote commentary on   "Commercial Arbitration" (2nd Edition, page 169) by  Mustill & Boyd which reads as under:\027   "It is common to use expressions such as ’a  notice of arbitration’ or ’the commencement of an  arbitration’ as if they had the same meaning for all  purposes, in the context of all the various possible  types of agreement to arbitrate.  This is misleading,  for when enquiring whether sufficient steps have  been taken to set an arbitration in train, the answer  may depend on the reason why the question is  being asked.  There are several different reasons

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why it may matter when the arbitration has begun.   Of these, the following are probably the most  important.

First, the question may be whether, at a  given moment, there is any person or group of  persons with jurisdiction to make an award, and  power to give directions and make rulings in the  course of the reference.  For this purpose, what is  being considered is whether the arbitration has  reached the stage where there is a completely  constituted arbitral tribunal.

Second, the problem may relate to the  jurisdiction of the arbitrator.  Thus, if there is a  general reference of disputes the scope of the  reference will be determined by the state of the  disputes at the moment when the arbitration was  begun.  Disputes arising thereafter must be the  subject of a separate arbitration, unless brought  within the existing reference by consent.

Third, the purpose of the enquiry may be to  ascertain whether the claimant has taken such steps  as may be prescribed by statute or contract for the  purpose of preventing his claim from being time  barred.

Finally, it may be necessary to consider  whether one party has taken sufficient steps  towards setting the arbitration in motion to give  him certain procedural advantages in the  appointment of the tribunal: either as a preliminary  to appointing his own nominee as sole arbitrator,  or at least by way of preventing the other party  from exercising his statutory right to make, or  procure, a nomination in default.

It is plain that expressions such as ’the  commencement of the arbitration’ must have  different meanings in these various contexts.  For  example, the giving of a notice to concur in the  appointment of a sole arbitrator is sufficient to  prevent time from running under the Limitation  Act 1980; and it is also an essential first step  towards the making of a default appointment under  section 10(a) of the Arbitration Act.  But the  arbitration has not at this stage ’commenced’ in  any practical sense, since there is no person or  group of persons charged with any authority to  determine the matters in dispute."

Therefore, the position in law is that before the English  Arbitration Act 1996, the expression "commencement of  arbitration proceedings" depended upon the facts of each case.   There was no single conclusive test to determine  ’commencement". In a case, where it was necessary to consider  whether one party had taken sufficient steps for setting  arbitration in motion, the court has to consider the date of  setting up of arbitral tribunal.  In the matter involving the scope  of reference the test of the state of dispute was relevant.   Therefore, the expression "commencement of arbitration  proceedings’ had different meanings in various contexts.  The  learned authors have further observed that although notice to

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concur is an essential step, arbitration proceedings cannot be  said to have commenced in practical sense till tribunal charged  with authority stood duly constituted. It is for this reason that  English Arbitration Act 1996 now provides under section 14  that commencement will take place from the date when notice  to concur is served.  This view is supported by the judgment of  the division bench of this Court in Delhi Transport  Corporation Ltd. (supra), in which a similar question was  raised.  In that matter, the parties had entered into an agreement  on 15.1.1993 for display of advertisement on DTC buses in  Delhi.  The agreement was for a period of three years  commencing from 15.1.1993.  The agreement contained an  arbitration clause.  Disputes arose between the parties.  A  request was made by the contractor on 9.1.1995 for  appointment of arbitrator to settle the disputes.  This was  followed by another letter dated 26.11.1995 containing a  similar request.  On 16.1.1996, he filed a petition under section  20 of the 1940 Act.  The counsel appearing for DTC made a  statement in the court on 19.7.1996 that an arbitrator had been  appointed on 4.7.1996 as per the agreement.  The petition  became infructuous in view of that statement.  The arbitrator  conducted the proceedings and made an award on 6.10.1998.   To enforce the award, the contractor filed an application under  1996 Act.  The DTC contested that application on the ground  that the 1996 Act was not applicable and, therefore, the  execution petition was not maintainable.  The contention of the  DTC before the High Court was that the proceedings had  commenced under the old Act.  This objection was upheld by  the learned single Judge based on the view that the arbitration  proceedings had commenced on the date when request for  appointment of arbitrator was made which was prior to  16.8.1996 when the new Act came into force.  The contractor  went in appeal.  The division bench of the High Court found on  facts that the parties went for arbitration with clear  understanding that the proceedings would be conducted under  the new Act, particularly when the appointment of arbitrator  was made after the new Act had come into force and  particularly when the parties had participated in the arbitration  proceedings with the understanding that the proceedings would  be governed by the new Act.  Hence, the High Court decided  the matter in favour of the contractor.  Aggrieved, the DTC  came in appeal to this Court.  This Court found on facts that the  arbitration clause, which is identical to the clause in the present  case, showed that the parties had agreed to be governed by the  law in force at the relevant time and such arbitration clauses  were recognised under the new Act.  This Court further found  from the conduct of the arbitration proceedings and the  participation of the parties therein that the parties had agreed to  proceed under the 1996 Act and, accordingly, this Court upheld  the judgment of the division bench of the High Court.  In my  view the said judgment applies to the present case.  The point to  be noted is that while construing section 85(2) of the 1996 Act,  which is a transitional provision, the terms of the arbitration  clause and the conduct of the parties were taken into account.   Therefore, interpretation of section 85(2)(a) cannot be confined  to section 21 of the 1996 Act.  However, in cases where the  new Act is applicable one has to go by section 21 and in which  case arbitration proceedings will commence from the date when  request is received by the respondent for referring the dispute to  arbitration, unless the parties have agree to the contrary.

In the case of N.S. Nayak (supra), this court held that  even in cases of pending arbitration proceedings the parties had  an option of changing the procedure so as to be governed by the  provisions of the 1996 Act.  

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In the case of Charles M. Willie & Co. (Shipping) Ltd.  (supra), the facts were as follows.  By a memorandum of  agreement dated April 1, 1990, Charles M. Willie & Co.  (Shipping) Ltd. sold their vessel to Ocean Laser Shipping Ltd.   The MOA provided for an arbitration clause, which inter alia  stated that if any dispute arises in connection with the contract,  the same shall be decided by a single arbitrator and if the parties  did not agree on the appointment of a single arbitrator, the  dispute shall be settled by three arbitrators, each party  appointing one arbitrator, the third to be appointed by London  Maritime Arbitrators Association.  On 21.11.1990, Willie  received a letter from solicitor of Ocean Laser Shipping Ltd.  enquiring about an engine stoppage in January, 1988.   Consequently, the dispute started.  On 12.3.1992, Ocean Laser  Shipping Ltd. through their solicitor invited Willie & Co. to  agree on the appointment of a single arbitrator and further  stated that in the event of Willie & Co.’s failure to nominate its  arbitrator by 3.4.1992, Ocean Laser Shipping Ltd. appointed  one Mr. Kazantzis as an arbitrator.  On 5.11.1993, Ocean Laser  submitted their claim before the arbitrator.  On 18.2.1994,  points of defence were filed.  One of the points which arose for  determination was as to when the arbitration could be said to  have commenced.  Taking a clue from section 34(3) of the  Limitation Act, 1980 which provided that an arbitration should  be treated as having been commenced when one party served on  the other party a notice requiring him to agree to the  appointment of an arbitrator, it was held by Queen’s Bench that  commencement took place from receipt of such notice.  This  judgment has no application to the facts of the present case.   The present case involves interpretation of transitional  provisions, which was not in issue in the said judgment.   Further, the judgment of Queen’s Bench was based on  provisions of Limitation Act, by analogy.  Further, the  judgment of Queen’s Bench was delivered under the  Arbitration Act, 1996 under which the parties are free to agree  when arbitration is to be regarded as having commenced both  under the said Act and for limitation purposes and that in the  absence of the agreement, the provisions of section 14 of the  English Arbitration Act, 1996 were to apply.  

To sum up, in this case, the question concerns  interpretation of transitional provisions; that section 85(2)(a)  emphasizes the concept of "commencement" whereas section  48 of the 1940 Act emphasized the concept of "reference"; that  section 85(2)(a) provides for implied repeal; that the scheme of  1940 Act is different from the 1996 Act; that the word  "reference" in section 48 of the old Act had different meanings  in different contexts; and for the said reasons, I am of the view  that while interpreting section 85(2)(a) in the context of the  question raised in this appeal, one cannot only rely on section  21 of 1996 Act.  

In the light of what is stated above, I now refer to the  facts of the present case.  The parties entered into an agreement  on 7.4.1992 which contained an arbitration clause 20, which  inter alia stated that in the case of dispute between the parties  arising in relation to the contract, the dispute shall be referred to  a single arbitrator, in case both sides agree upon one such  arbitrator and failing such agreement, the dispute shall stand  referred to two arbitrators, one to be appointed by the either  party, and in case of disagreement, between the two arbitrators,  the dispute was to be referred to an umpire to be appointed by  the two arbitrators.  Before entering upon the reference under  clause 20 quoted above, all such arbitration proceedings were to

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be governed by the provisions of the Arbitration Act, 1940 or  under any statutory re-enactment.  This clause is similar to the  one considered by this Court in the case of Delhi Transport  Corporation Ltd. (supra).  On the strength of the agreement  dated 7.4.1992, the respondent herein filed title suit No.40 of  1995 for injunction and in the said suit, the appellant herein  applied for stay under section 34 of the 1940 Act.  Suffice it to  state that on 6.5.1997, when the matter came up before the High  Court, the parties agreed that all disputes between them may be  referred to arbitrators chosen by the parties as per the  agreement.  A consent order was accordingly passed on that day  by the High Court referring the dispute to the arbitrators.   Therefore, for all practical purposes, the arbitration commenced  on 6.5.1997, by which time the 1996 Act had come into force.   In the circumstances, I am in agreement with the majority  decision of the arbitrators that the proceedings in the present  case would be governed by the provisions of the 1996 Act.

For above reasons, I respectfully dissent from the opinion  of Sinha, J.  Consequently I am of the view that this Civil  Appeal ought to fail and be dismissed with no order as to costs.   

CIVIL APPEAL Nos. 9673-9674 OF 2003

       Now coming to the Civil Appeal Nos.9673-9674 of 2003,  the facts briefly are as follows.  On 6.4.1998, the learned  arbitrators by majority decision took the view that in the present  case the arbitration proceedings had commenced on 6.5.1997  when a consent order was passed by the Patna High Court and,  therefore, the proceedings were governed by the 1996 Act.   Aggrieved, the appellant herein had moved the single Judge of  Delhi High Court.  By order dated 13.10.1998, the learned  single Judge of the High Court was pleased to uphold the  majority decision dated 6.4.1998.  Being aggrieved, the  appellant carried the matter in Letters Patent appeal which was  dismissed as not maintainable.  Having regard to the provisions  of section 39 of the 1940 Act as interpreted by this Court in the  case of Union of India v. Mohindra Supply Company reported  in [AIR 1962 SC 256] second appeal, which included Letters  Patent appeal under section 39(2), was not maintainable.   Accordingly, the civil appeal Nos.9673-74 of 2003 fail and are  dismissed.

       There shall be no order as to costs in all the appeals.